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    Question

    Which of the following types of credit facilities is

    most suitable for an MSME requiring financing to maintain inventory levels, receivables, and working capital needs?
    A Term Loan Correct Answer Incorrect Answer
    B Overdraft Correct Answer Incorrect Answer
    C Cash Credit Correct Answer Incorrect Answer
    D Bank Guarantee Correct Answer Incorrect Answer
    E Letter of Credit Correct Answer Incorrect Answer

    Solution

    Cash Credit is a short-term fund-based facility provided by banks to finance working capital needs like inventory and receivables. It is designed to help businesses maintain their day-to-day operational needs and is often renewed annually as a revolving credit facility.

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